A outstanding crypto analyst said that Bitcoin went through a big event over the past few months because the coin’s open interest plummeted by nearly 20%, wiping out around $12 billion.
BTC’s open interest wipeout might seem like detrimental to the coin, but CryptoQuant analyst DarkFost believes that the cleansing is crucial for a “bullish continuation”, citing that it could provide opportunities for its investors within the near term if history repeats itself.
Bitcoin’s nearly $12 billion open interest shakeout earlier this month is likely to be just the catalyst needed for the asset to regain its upward momentum, in response to a crypto analyst.
A Catalyst
Data from CoinGlass shows that the firstborn crypto’s open interest dropped by 19%, from $61.42 billion to $49.71 billion, citing that the $12-billion shakeout is likely to be a very good thing for Bitcoin.
“Following the recent panic triggered by political instability linked to Trump’s decisions, we witnessed a large liquidation of leveraged positions on Bitcoin,” DarkFost said.
Source: Coinglass
The analyst said greater than $10 billion in open interest has been erased in just two months, with an estimated $10 billion worn out between February 20 and March 4.
DarkFost claimed that the wipeout experienced by BTC earlier this month could serve because the catalyst needed by the coin to regain the momentum that can allow the crypto to maneuver upward.
“This could be regarded as a natural market reset, an important phase for sustaining a bullish continuation,” the analyst explained.
Good Opportunities
DarkFost suggested that the recent ordeal faced by Bitcoin might prove to be advantageous to the crypto in the following few months.
The analyst provided a chart that shows the reset phases by determining the moments when the 90-day open interest change turns negative, adding that the present 90-day change in Bitcoin futures open interest plummeted and is now sitting at -14%.
“Taking a look at historical trends, each past deleveraging like this has provided good opportunities for the short to medium term,” the analyst added.
Influence Of The Federal Reserve
Some experts said that the Federal Reserve’s actions might need an impact on what is going to occur next to Bitcoin.
Today’s meeting of the Federal Open Market Committee could add more volatility to the crypto if there’s something unexpected within the monetary policy.
Bitget chief analyst Ryan Lee explained that Bitcoin is already hovering on the $80,000 level and more volatility is likely to be expected within the coin’s price and open interest if the March 19 Federal Open Market Committee meeting delivers any surprises.
“The market largely expects the Fed to carry rates regular, but any unexpected hawkish signals could put pressure on Bitcoin and other risk assets,” Lee said.
As of press time, Bitcoin’s open interest stood at $49.02 billion, which is roughly a 6.5% increase over the past five days.
Featured image from The Independent, chart from TradingView
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